Bitcoin and other cryptocurrencies staged a sharp rebound during early Asian trading on Sunday (1/3/2026) after Iran confirmed that its Supreme Leader, Ayatollah Ali Khamenei, had been killed in an attack carried out by the United States and Israel. Following the news, Bitcoin rose as much as 2.21% to US$68,196. As of 11:00 a.m. in Singapore, Bitcoin was trading around US$67,700 after having fallen as much as 3.8% the previous day. Ether, the second-largest token, climbed up to 4.58% and moved back above the US$2,000 level.

The cryptocurrency market, which operates 24 hours a day, seven days a week, experienced turbulence just hours after the bombings began. Iran launched retaliatory strikes across several locations, including Israel, Qatar, the United Arab Emirates, and Bahrain, and warned of further attacks against US-linked bases in Iraq. Nevertheless, digital assets began to recover throughout the day, with Bitcoin moving sharply higher after initial reports of Ayatollah Ali Khamenei’s death.

“Traders generally do not expect the Iran conflict to result in significant negative economic consequences, and demand for upside Bitcoin call options has clearly increased in recent days,” said Markus Thielen, Head of Research at 10x Research, as quoted by Bloomberg on Sunday (1/3/2026). He added that traders were also positioning ahead of the upcoming Federal Reserve meeting.

According to data from CoinGecko, the cryptocurrency market regained approximately US$32 billion in market value on Sunday morning (1/3/2026), after losing around US$128 billion the previous day. “Bitcoin is the only major liquid asset that trades 24/7, effectively absorbing selling pressure that would typically spill over into equities, bonds, and commodities,” said Hayden Hughes, Managing Partner at Tokenize Capital. He noted that a clearer price reaction would likely be seen on Monday (2/3/2026) when US equity markets and Bitcoin ETFs reopen.

With missiles striking Dubai, Iranian retaliation across the Gulf, and the risk of disruption to the Strait of Hormuz, the situation was viewed as far from contained. For Bitcoin, the weekend losses extended a months-long downturn in the crypto market, which began with the liquidation of roughly US$19 billion in leveraged positions in October 2025. Since then, Bitcoin has declined about 50% from its record high above US$126,000 earlier that month, failing to keep pace with rallies in gold and other safe-haven assets.

“As is often the case when major events unfold over the weekend, Bitcoin acts as a pressure valve,” said Justin d’Anethan, Head of Research at Arctic Digital. He observed that the initial impact on the currency was not as severe as some might have anticipated. “With most leverage already flushed out and sellers largely exhausted, macro events now have limited impact,” he added.

Meanwhile, with traditional trading venues closed, digital asset investors turned to tokenized commodities on the decentralized exchange Hyperliquid to position for geopolitical fallout. Prices of contracts linked to oil, gold, and silver surged on the platform, according to analysis published by CryptoQuant. Market reactions were also reflected in a sharp increase in Bitcoin derivatives selling pressure, with about US$1.8 billion in sell volume recorded within a single hour on Saturday morning.

“Such imbalances reflect clear seller dominance and heightened short-term risk aversion. The flows appear to be driven more by emotion and risk management than by structural dynamics, warranting a cautious approach,” wrote crypto analyst Sylvain Olive.